[Page 789]

251. Memorandum From Acting Secretary of State Johnson to President Nixon 1

SUBJECT

  • Malta

Maltese Prime Minister Mintoff has confronted the British with another year-end deadline with respect to the British bases on the island. Unless the UK and the other Allies agree to compensate Malta in the future for the decline in the value of the British pound (about 10 percent) since the base agreement was concluded last March, the facilities will not be available to the British forces after December 31. Mintoff has raised several other issues with the British as well, but the devaluation question is the one to which he has attached a deadline.

Mintoff tried unsuccessfully last winter during negotiation of the present agreement to get an exchange rate guarantee from the British. He finally gave up the idea, but warned that he might return to the question later. He did so in a letter to Prime Minister Heath on November 17, and since then has tried to make a case that if the British advance rental payment due on January 1 does not include compensation for devaluation, the British, not he, will have terminated the base agreement.

The present agreement gives Malta 14 million pounds a year as rent for the bases. (Our annual share is 3.66 million pounds.) The British have told the Maltese that they will not increase the agreed rental payment. They consider that they made a fair agreement which they intend to honor in letter and in spirit. They have added that they would not try to maintain their forces in Malta against the wishes of the Maltese Government, and that if they are obliged to begin withdrawing their forces again, the process will be irreversible this time.

We have also told the Maltese and our Allies that we firmly oppose an increase in the rental payments to compensate for devaluation. As is the case with the British, our basic concern is to avoid setting a precedent which could have serious adverse implications for our own international agreements. We want to do nothing which could imply an obligation to compensate other countries for changes in the value of the dollar when our agreements do not themselves explicitly provide for it.

The stage is thus set for another exercise in Maltese brinksmanship. There is of course nothing surprising in Mintoff’s tactics, although we do consider it puzzling that he would put in jeopardy a fair and lu[Page 790]crative seven-year agreement only nine months after he signed it, and on an issue which is not an element of the agreement even by implication.

As we did last year at this time, we are reminding the British of the importance which we attach to their presence in Malta, and are urging them to examine all possibilities for an accommodation with the Maltese. At the same time we feel we must support the British in opposing compensation to Malta for devaluation, and we do not expect the British to change their position on that question. We are satisfied that the British have dealt patiently and reasonably with the Maltese, and we must now face the possibility that Mintoff, for reasons of his own, has deliberately provoked this confrontation on an issue on which he must have known it would not be possible for the Allies to yield because of its precedent-setting character.

If, as appears possible, it is Mintoff’s intention to expel the British without regard to the loss to Malta, there does not seem to be any way to stop him. On the other hand, it is barely possible that he may himself be playing brinksmanship, and when faced with an unyielding stand by the UK and the Allies will recede from his present demand. We should know the outcome in the first few days of January. There is, of course, also the possibility that faced with the severe economic loss that would result from the departure of the British, political elements in Malta might seek to oust Mintoff. However, it does not seem likely this would happen in time to be of much help in the present situation.

If the British are expelled, the chances of the Soviets being able to exploit the situation to establish a military presence in Malta appear to be considerably less than they were last year. It seems most likely that Malta will seek aid from the Libyans, who could supply funds and would welcome this opportunity to extend their influence. However, Libyan money alone cannot replace the jobs that would be lost with the departure of the British forces. This, plus traditional Maltese antipathy toward Libyans might well support those internal forces which could bring Mintoff down over time.2

U. Alexis Johnson
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 622, Country Files—Middle East, Malta, Vol. II. Confidential.
  2. In a telephone conversation with Kissinger, January 4, 1973, at 5:25 p.m., Under Secretary Johnson reported that the Italians had come up with a proposal the same day that “those countries which were buying pounds would contribute to Malta the amount they save because of the pound devaluation.” When Kissinger asked for his opinion, Johnson replied that “we should go along with the proposal within the context of our previous offer of increasing our aid, you know. This wouldn’t mark any change.” Kissinger concurred, and Johnson continued, “And say that this is—what I would like to say is that this is it.” Kissinger again agreed and added, “I’m sure the President will go along with that.” Johnson then remarked that he had drafted a paper for White House clearance, “which will say that this is it, that we go along with this but we go no further.” (Library of Congress, Manuscript Division, Kissinger Papers, Box 374, Telephone Conversations, Chronological File)